Bumi’s $231 million investment on hold

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Coal mining firm PT Bumi Resources (Bumi) has not yet received US$231 million in funds it expected to receive during the first half of this year from an investment that is expected to help the company pays its debts, shareholder says.

The funds are invested at local asset manager PT Recapital Asset Management and are due to be repaid to Bumi Resources on August 27, 2012.

“The management of Bumi Resources [Bumi] is engaged in an active dialogue with Recapital regarding the timing of the repayment,” London-listed Bumi Plc., which controls the majority stake in Bumi Resources, said in a disclosure file submitted to the London Stock Exchange on Monday.

Recapital is 99 percent owned by Recapital Advisor and Recapital Securities, which is controlled by Rosan Roeslani, a non-executive director of Bumi Plc. and also the president director of Indonesian coal miner PT Berau Coal Energy (BRAU).

Bumi Resources and Recapital entered into an agreement on August 27, 2008, allowing the asset manager to manage $350 million of the coal miner’s funds for a period of six months, according to Bumi’s 2011 financial report.

The agreement was added with a second one signed on September 2, 2009, with $50 million funds to manage for another six-month period.

Bumi Resources and Recapital last year extended the agreement until August 27, 2012, triggering a comment from Bumi Plc.’s shareholder Nathaniel Rothschild, who called for a “radical cleaning up” in Bumi’s financial management.

Rothschild’s comment, which was made public through a purposed leaked letter, led to a spat with the Bakrie Group conglomerate, which is owned by Aburizal Bakrie, chairman of Indonesia’s Golkar political party.

Rothschild has now been ousted from co-chairman position to become an independent director of Bumi Plc.

Bumi Resources is planning to repay $600 million debt to the China Investment Corporation (CIC) this October using funds from the company’s investment in several places including those in Recapital, corporate secretary Dileep Srivastava has said.

Srivastava added that the loan was supposed to be paid in 2014, but Bumi Resources aimed to cut loans to a level of a one-time adjusted EBITDA (earnings before tax, depreciation and amortization) by the end of 2013.

Bumi is also in talks with strategic investors to divest 20 percent of its overall 87 stake in PT Bumi Resources Minerals (BRMS) to raise funds for the debt repayment, according to him.

Bumi Minerals announced on Monday a steep drop in net profit in the first quarter of this year on lower contribution from its subsidiary, PT Newmont Nusa Tenggara (NNT).

Net profit in the January-March period was at $62,871 compared with $37.01 million net profit booked in the same period last year.

Revenue was 70 percent higher at $7.03 million in the first three months of the year, versus $4.14 million in the same quarter last year, but NNT’s net income contribution slid to $2.19 million from $41.22 million.

“As expected, the income contribution from NNT continued to drop. This is due to the lower copper and gold production rate from NNT’s Batu Hijau mine site,” Bumi Minerals said in a written statement.

The Batu Hijau mine site’s copper and gold outputs dropped 49 percent and 76 percent, respectively, due to the ongoing development project that is currently taking place there.

Shares in Bumi traded at Rp 1,160 apiece on Monday, up 4.5 percent from the previous day. The stock has tumbled 46.67 percent since the start of this year.

— JP/Raras Cahyafitri